European airlines currently dwarf African airlines on Europe-Africa routes. In addition, most of them enjoy a higher passenger revenue yield on their African services than on other long-haul operations. African airlines are now examining ways to redress the imbalance.
European flag-carriers have long been a significant force on scheduled routes between Africa and Europe. Now, following its acquisition of a controlling interest in privately-owned French carrier UTA last year, Air France has emerged with the strongest European airline presence in Africa.
Between them, the two French airlines reportedly carry about a quarter of all scheduled-service passenger traffic between Africa and Europe, and about the same proportion of scheduled freight traffic. Air France has by far the strongest route network to North Africa of any European carrier, while UTA has long-standing air links with Sub-Saharan Africa.
African countries now contemplating new airline groupings, co-operative agreements and multinational efforts hope to offer more coherent competition to European carriers than they have in the past. They want to provide trunk-route services in their own right. But in addition to overcoming their infrastructure problems, African airlines will have to match the higher service standards offered by European airlines.
British Airways is another important force in Africa and operates a larger network in Sub-Saharan Africa than any other European carrier. It, too, has increased its market share through acquisition, in this case by taking over British Caledonian Airways at the end of 1987 and merging it into its own operations. This move boosted British Airways’ system-wide scheduled traffic (in tonne-km) by about a quarter and its African traffic by nearly 50%.
British Caledonian’s African routes, mainly to West Africa, serving points such as Abidjan, Accra and Lagos, have a significantly higher revenue yield than British Airways’ routes to Southern and East Africa. But also higher unit costs.
This year, BA is likely to earn revenue of some US$600 million from passenger and freight markets in Sub-Saharan Africa alone, compared with about US$500 million in the case of Air France and a similar amount for UTA.
In BA’s case, its African route network is the source of just under 10% of its system-wide revenue. For Air France the position was similar, but with the inclusion of UTA the figure is now nearly 20%. If Air France’s operations in North Africa are also taken into account, the two European airlines’ African routes produce about 25% of their worldwide traffic revenue.
French Government air transport policy over the years has been to split markets geographically, allowing UTA the long-haul routes to Sub-Saharan Africa, and, via the Middle East, to South-East Asia, Australasia and the Pacific.
In its last year or two as an independent operator UTA was permitted to develop a small transatlantic operation, in return for letting Air France extend its North American services into the Pacific as far as Tahiti. UTA had no short or medium-haul routes, although at the time its owner the Chargeurs Group sold out to Air France the airline was lobbying hard to be allowed to operate within Europe. UTA was widely acknowledged to be the world’s longest-haul airline, flying sectors averaging 3,500 kilometres.
But this pattern of operations, combined with vulnerability to market conditions in the areas it serves, particularly Africa, caused UTA some financial headaches. The airline trimmed its system-wide capacity on scheduled passenger services from 8.3 billion seat-km in 1987 to 8.1 billion in 1989; it was able to increase its load factor about two percentage points in that period, but could not prevent its total revenue from declining.
The airline managed to make up for some of the shortfall in its passenger business with improved freight traffic, which increased by about 22% between 1987 and 1989, while its freight revenue increased by 15% in the same period.
Air France plans to keep UTA operating as a separate entity within the Air France Group, although the old geographical split of routes between the two carriers no longer necessarily applies. For example, some rationalisation of the Group’s services to Africa may become necessary.
In 1989, Air France carried two million passengers between France and North Africa, a figure which has been growing by around 8% a year and which is unrivalled among other European airlines. Alitalia, the nearest, carried a total of 333,000 passengers on its North African routes.
However, of all the major European flag-carriers, Air France derives the lowest revenue yield (per passenger-km) on its operations to sub-Saharan Africa, according to sources. On the whole, Air France earns a lower yield in Africa than on its other long-haul routes. The reverse is true for all other European carriers.
UTA has a higher fare yield on its scheduled services to Africa than all European carriers, achieving over 11 US cents per revenue passenger-km in 1989. Meanwhile, Air France achieves lower yields on its freight services to Africa, though UTA is not among the top performers in this sector. Both airlines deploy all-cargo aircraft in Africa, with Air France achieving a freight yield less than two-thirds that of UTA.
African operations are particularly important for Sabena, too. The Belgian airline derives 32% of its scheduled passenger traffic and 26% of its passenger revenue from its African routes, mainly to West Africa. In Sub-Saharan Africa, Sabena is the largest European operator after British Airways, Air France and UTA.
Indeed, Sub-Saharan Africa accounts for around 25% of Sabena’s worldwide passenger traffic and its passenger traffic in Africa grew by more than 12% in 1989.
Lufthansa German Airlines, another important European carrier in Africa, focuses mainly on destinations in Southern and East Africa, and also serves Lagos, Douala and Kinshasa in the West. Lufthansa’s total traffic revenue from Africa last year was DM403.7 million Deutsche Marks (about US$230 million).
The German carrier says that, in spite of economic uncertainties, it achieved double-digit increases in its African traffic in 1989. But it adds that economic forecasts are hard to make because the continent’s most important exports, raw materials, are subject to enormous price fluctuations on world markets.
Lufthansa’s scheduled operations to Sub-Saharan Africa account for only about 5% of its total international passenger traffic and although the airline is one of the world’s largest cargo carriers, unlike Air France, it deploys very little of its freighter capacity on African routes.
KLM’s operations in Africa are similar to those of Lufthansa, though the Dutch airline recently suspended indefinitely a twice-weekly Amsterdam-Kano service, citing bilateral problems between Nigeria and The Netherlands.
Swissair, Alitalia and TAP-Air Portugal complete the list of major European carriers with substantial African operations, while Iberia and Olympic Airways have a minor presence in this market. TAP-Air Portugal reported a 28% increase in its passenger traffic in 1988, but the 1989 increase was a marginal 1.5%.
European carriers enjoy higher passenger revenue yields on African routes – ranging from eight to 11.5 US cents per passenger-kilometre – than on their other long-haul routes. UTA, Swissair, Sabena and Lufthansa are at the higher end of the scale, while Alitalia, KLM, TAP and British Airways are at the lower end.
Developments in Europe will have important consequences for Africa. For example, the extent to which the European Commission (EC) succeeds in its aim of gaining a role in air services negotiations with non-EC countries has major implications for Africa.
Apart from aero-political matters, African carriers may find it difficult to compete with the new airline groupings emerging in Europe. Reconstructed Sabena World Airlines, for example, with 20% shareholdings now held by KLM and British Airways, plans to build a new hub system based on Brussels with connections into neighbouring countries. This development could boost Sabena’s financial strength, as well as give a new impetus to its African services.
Similarly, members of the European Quality Alliance, a tie-up between Swissair, Austrian Airlines, SAS and Finnair, could jointly feed traffic onto Swissair’s African services.
KLM is busy developing its hub at Amsterdam airport, which, along with Charles de Gaulle Airport, Paris, has no shortage of aircraft take-off and landing slots and thus provides ample room for further expansion to destinations in Africa.
In addition, several European airlines now have closer relations with North American carriers, opening up the possibility of increased Africa-US air transport connections via Europe, given the current scarcity of direct air links between Africa and North America.